LONDON — A couple of decades ago there appeared a new blossom in the moribund garden of liberalism called neoliberalism. Naturally with that ever-hopeful prefix, “neo,” slapped onto it, the liberal faithful were aglow with anticipation of yet another glad and glorious morn. Happy days would be here again. We now know that those days never came. Neoliberalism was a bust mainly because there was not much new to it. Essentially it was the same old nanny state mentality motivated by envy and indignation.

One of the neoliberal’s tenets was that white-collar criminals were getting off easy. That is to say white-collar criminals, for instance a corporate fraudster, were being treated much gentler than muggers, bank robbers, and other violent criminals. It was a class thing or a racial thing. The neoliberal promised to end this injustice. Neoliberals were going to get tough with errant businessmen.

Well, the neoliberal blossom has wilted along with all the other varieties of liberalism. Its obsession with white-collar criminals, however, has remained, much to the detriment of justice as a whole and of a vigorous entrepreneurship. To begin with, a white-collar criminal is profoundly different from a violent criminal. The first is a scoundrel. The second is a scoundrel and a menace to human life. Further, America has always been inhospitable to white-collar criminals and long before the rise of the neoliberal we have been locking them up. Two reasons that America has been a vibrant place to do business is America’s rule of law and its relative freedom from corruption. Yet now America is losing its position as one of the most favorable countries in the world to do business. The reason is the government’s obsession with white-collar crime as manifest by such inhibitors of business as the Sarbanes-Oxley Act.

The law was passed by congress as a typical overreaction to the white-collar criminals of the 1990s, most of whom were prosecuted and jugged without resort to Sarbanes-Oxley. It has always been illegal to defraud. What Sarbanes-Oxley has achieved is the stifling of honest business dealings. It has placed redundant accounting regulations on business and nearly criminalized serving on the board of directors, whether the board be that of a giant corporation or a local publicly-traded plumbing company. The cost of Sarbanes-Oxley has driven IPOs abroad and persuaded entrepreneurs to forego IPOs entirely, denying them access to public capital, to growth, and to job creation.

Consequently the business climate in the United States has turned sour. The business climate in places like London is less risky and IPOs that might have been issued here are now issued in London. The London Stock Exchange markets itself as “A Sarbanes-Oxley Free Zone.” London is prospering, a businessman told me the other day, because of North Sea oil and “Sarbanes-Oxley, which has encouraged Americans to take their IPOs here.”

Unfortunately, Washington’s campaign against white-collar crime has not ingratiated us to our most loyal ally. Our Justice Department is now pursuing three British bankers who allegedly defrauded a British bank. The evidence against them in Britain is insufficient to prosecute them according to British law, and they are free here. But our Justice Department argues that they were part of the Enron scandal and is extraditing them to Texas — an instance of prosecutorial rapaciousness that has made headlines here for a week and created growing enmity against us. The reason for the enmity is that the Justice Department is extraditing the Brits by a 2003 extradition treaty that was reserved for terrorists and that Washington has not even signed.

As you read this the anger against Washington grows in London. The three British bankers face as much as two years in a Texas prison without bail before they go to trial because they fought extradition. Thus, even if they are eventually found innocent their lives are ruined. Tension is also growing as the British newspapers are calling on the government to take last-minute measures against flying the men to Texas. Now comes word that another British banker who was questioned by the FBI about his three indicted colleagues has committed suicide. The bad feeling against us is bound to grow.

The bad feeling comes from the left, for instance, the Guardian. And it comes from the right, from America’s friends at the Telegraph newspapers and the British Spectator. Washington’s obsession against white-collar crime has at least been a unifying force in British politics. They are all mad at us.

Mr. Tyrrell is founder and editor in chief of The American Spectator, a contributing editor to The New York Sun, and an adjunct scholar at the Hudson Institute.